The Company has successfully completed testing operations of the Amguri 10B well. The upper portion of the zone was perforated to determine the hydrocarbon potential of the zone. The flow from the total completion interval confirmed the presence of a gas-condensate reservoir throughout the entire zone of 32 meters.

Due to difficulties in establishing stable flow rates in high pressure gas-condensate situations and having regard for testing equipment limitations and safety precautions, the well was not tested to its full potential.

The well had a tested tubing head pressure of 2,500 psi with an 18/64 inch choke from both intervals. Management believes that the well could produce in excess of 1,000 boe/d once connected to the production facilities.

With existing well site facilities located at Amguri 6, approximately 200 meters from the surface location of Amguri 10B, new production from Amguri 10B is expected to be on stream during the fourth quarter, generating increased cash flow and production to the Company. The existing purchaser of the natural gas has recently indicated that they will be able to handle the additional supply from Amguri 10B. Drilling of the next well, Amguri 11, is expected to commence during the second week of August.